Hyundai China plant restarts but investors fret over supplier problem

Hyundai Motor said a Chinese car plant had resumed production after a delayed payment to a parts maker halted operations this week, but the apparent lack of a clear solution to the problem sent shares in the automaker and its suppliers sliding.

Hyundai is at odds with its Chinese joint venture partner BAIC Motor, with the latter wanting to shift to cheaper Chinese suppliers to better compete with local brands, sources familiar with the matter have told Reuters.

The South Korean auto giant said operations at the plant in Heibei province had resumed on Thursday afternoon after being suspended since Tuesday - the second time in as many weeks that it has had to halt production at Chinese plants due to payment problems.

"We continue to be in discussions over payment," a spokesman for the automaker said on Friday.

Samsung Securities analyst Esther Yim said the supplier problems seemed unresolved, helping trigger fresh slides in shares of both Hyundai and its supplier affiliates on Friday.

"Investors are frustrated that Hyundai is just blaming the political situation, and doing little to address the problem. Hyundai is a silent bystander," she said, adding that apparent infighting signalled a prolonged crisis for the South Korean automaker.

Hyundai is already dealing with a slump in sales in the world`s biggest auto market due to diplomatic tensions between the two nations and fierce competition from local brands.

Shares in Hyundai were down 3 percent and they have lost about 7 percent since reports of the payment problems first emerged. Shares in top supplier Hyundai Mobis tumbled as much as 6.6 percent on Friday and they have fallen some 10 percent in the same time period.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)

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